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Obama's budget includes $100-billion jobs plan

The president's proposed blueprint also allows Bush-era tax cuts for wealthy families to expire, and includes a freeze on discretionary spending.

February 01, 2010|By Mark Silva and Richard Simon

Reporting from Washington — President Obama today will propose a $3.8-trillion federal budget that includes a $100-billion jobs package, more education spending and higher taxes on families earning more than $250,000 a year.

The budgetary blueprint for fiscal 2011, which starts Oct. 1, is 3% more than the government is spending this year, according to the Office of Management and Budget.


FOR THE RECORD:
Obama's budget: An article in Monday's Section A about President Obama's 2011 budget said Republican Sen. John Thune is from South Carolina. He is from South Dakota. —

The White House envisions a $1.267-trillion deficit in fiscal year 2011, smaller than this year's projected $1.56 trillion. That would be 8.3% of the gross domestic product, down from 10.6% this year. The White House Budget Office forecasts that it could be trimmed to less than 4% of the GDP by 2015.

"It's not a left-wing budget. It's not a right-wing budget," White House Communications Director Dan Pfeiffer said in a briefing for reporters Sunday. "It's a pragmatic budget. It's a common-sense budget.

"When [Obama] came to office we had a jobs crisis, a housing crisis, a fiscal crisis," Pfeiffer said. "We are making progress. We also recognize that over the medium and long term we have to deal with the fiscal crisis. This budget recognizes that."

The budget includes a freeze on the overall level of discretionary spending apart from national security and mandatory entitlements -- Social Security, Medicare and Medicaid.

The $3.834-trillion spending plan also includes:

* $100 billion for investments in small-business tax cuts, infrastructure and clean energy, all designed to create jobs. This includes a new Small Business Jobs and Wages Tax Cut to spur small-business hiring and wage increases, at a cost of $33 billion.

* Allowing the 2001 and 2003 tax cuts to expire for households making more than $250,000 a year, generating $678 billion over 10 years.

* A $3-billion increase in the Elementary and Secondary Education Act for public school funding, raising the total to $28 billion, plus $1.35 billion more for the Race to the Top program for schools to increase student performance.

* $17 billion for Pell Grant funding for college aid.

Jobs were a main topic on the Sunday talk shows.

White House spokesman Robert Gibbs expressed hope on CNN's "Late Edition" that a jobs package "in the $100-billion range" would be the next order of business before the Senate.

"We need to recognize what's on the mind of the American people, which is jobs," Rep. Chris Van Hollen of Maryland, who heads the House Democrats' campaign effort, said on "Fox News Sunday."

And Senate Minority Leader Mitch McConnell (R-Ky.) said on "Late Edition" that as long as the legislation creates jobs, "we're willing to take a look at it." But he and other Republicans suggested that Democrats could improve economic recovery by dropping their healthcare overhaul and extending the tax cuts enacted under President George W. Bush, which expire at the end of the year.

"The best thing that we could do with respect to jobs is put that massive healthcare expansion on the shelf," Sen. John Thune (R-S.C.) said on CBS' "Face the Nation." He added that lawmakers also should "make it clear to small businesses that we're not going to raise their taxes in the middle of a recession," a reference to the expiring Bush tax cuts.

Reducing the deficit is one of the reasons the administration has focused on overhauling healthcare, White House Budget Director Peter R. Orszag said. "It will not be possible to restore long-term fiscal balance to the government without getting control over . . . healthcare costs," he said.

Creating jobs was a major theme of Obama's State of the Union address last week as he strove to reassure ordinary Americans that he understood their plight. He noted that the economy was improving but that too many people remained out of work, despite the $787-billion stimulus plan he signed into law a year ago.

But getting another jobs bill through Congress has proved difficult. In December, the House approved a $154-billion measure without a single Republican vote.

Senate Democratic leaders are expected to unveil their plans on jobs legislation this week, looking to pass a series of measures rather than one large package. The final legislation is expected to include money to fund infrastructure projects, promote green jobs and keep teachers, police officers and other public workers employed.

Democrats hope to win Republican support by including tax cuts for small businesses.

But a number of Obama's proposals are sure to face resistance on Capitol Hill.

"If borrowing and spending all this money led to more jobs, then we'd be at full employment already," Rep. Paul D. Ryan of Wisconsin, top Republican on the House Budget Committee, said on "Fox News Sunday."

Even the three-year freeze on discretionary spending will draw its share of criticism.

House Minority Leader John A. Boehner (R-Ohio), appearing on NBC's "Meet the Press" Sunday, called the freeze a "good first step," but added, "I think we can do much better."

Congress rejected a number of spending cuts that the White House sought last year, including an effort to end federal payments to states for jailing illegal immigrants convicted of crimes. California is the largest beneficiary of those payments.

Obama's budget would also provide $270 million to buy and upgrade an Illinois prison where the administration hopes to house some detainees from Guantanamo, as part of its effort to close the prison in Cuba.

The proposed budget would eliminate some capital gains taxes, along with tax breaks for oil, gas and coal companies.

And it would fund the wars in Iraq and Afghanistan.

mdsilva@latimes.com

richard.simon@latimes.com

Christi Parsons in the Washington bureau contributed to this report.

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